Guide
MYGAs
Everything you need to know about Multi-Year Guaranteed Annuities — the simplest, safest annuity on the market. How they work, how they compare to CDs, current rates, and the laddering strategy.
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What is a MYGA?
A Multi-Year Guaranteed Annuity (MYGA) is a type of fixed annuity that locks in a guaranteed interest rate for a specific number of years — typically 3, 5, 7, or 10.
You make a single lump-sum deposit. In return, the insurer guarantees your money grows at a fixed rate that never changes for the entire term. Your principal is 100% protected. No annual fees, no moving parts, no market exposure. You know exactly what your account will be worth on the last day of the term.
The simple version
Think of a MYGA as a CD from an insurance company — but with higher rates, tax-deferred growth, and more options at maturity.
It's the simplest, most transparent annuity product available.
How a MYGA works
You deposit a lump sum
Most MYGAs require a single premium payment. Minimums typically range from $5,000 to $25,000. You choose your term length at purchase: common options are 2, 3, 5, 7, and 10 years.
Your money grows at a guaranteed rate
The rate is locked in at purchase and will not change for the entire term. Interest compounds tax-deferred — you pay no taxes on the growth until you make a withdrawal. Most MYGAs use compound interest.
You have limited access during the term
Most contracts allow penalty-free withdrawals of up to 10% per year. Beyond that, surrender charges apply (typically 5–9% in year 1, declining annually). Many carriers waive charges for nursing home, terminal illness, or RMDs.
At maturity, you choose your next step
You enter a free-look window (typically 30 days) to withdraw your balance, roll into a new annuity via a 1035 exchange, let the contract auto-renew, or annuitize into a lifetime income stream.
Watch the maturity window
If you take no action during the free-look window at maturity, most contracts auto-renew at whatever rate the insurer is currently offering — which may be significantly lower than your original rate. Set a calendar reminder.
MYGAs vs. CDs, side by side
| Feature | MYGA | Bank CD |
|---|---|---|
| Issued By | Insurance company | Bank or credit union |
| Typical 5-Year Rates (2026) | 5.00% – 6.30% | 3.50% – 4.15% |
| Tax Treatment | Tax-deferred until withdrawal | Interest taxed annually |
| Backing | State guaranty associations (~$250K) | FDIC insured (up to $250K) |
| Annual Fees | None | None |
| Early Withdrawal | 10%/yr penalty-free; surrender charges beyond | Penalty (typically 3–6 months interest) |
| Minimum Investment | $5,000 – $25,000 typical | $500 – $1,000 typical |
| At Maturity | Withdraw, renew, 1035 exchange, or annuitize | Withdraw or renew |
| Probate | Bypasses probate (named beneficiary) | Subject to probate unless POD |
The dollar difference: $100,000 over 5 years
Assumptions: MYGA at 5.65% vs. CD at 4.05%. Federal tax bracket: 22%.
| Metric | MYGA (5.65%) | CD (4.05%) |
|---|---|---|
| Gross Interest Earned | $31,571 | $21,950 |
| Taxes Paid During Term | $0 (deferred) | $4,829 (taxed annually) |
| After-Tax Value at Maturity | $131,571* | $117,121 |
| Net Advantage | +$14,450 more with MYGA | — |
*Taxes are due on the MYGA's earnings when withdrawn, but the compounding advantage during the term creates a significantly larger ending balance.
MYGA rates in 2026
MYGA rates remain near 15-year highs in early 2026, driven by the Federal Reserve's rate-hiking cycle in 2022–2023 and elevated Treasury yields.
3-Year
4.75% – 5.75%
Slightly lower rates, ideal for shorter commitments or laddering.
5-Year
5.00% – 6.30%
The most popular sweet spot — competitive rate with reasonable commitment.
7–10 Year
5.25% – 6.50%+
Lock in today's elevated rates longest; requires a longer liquidity commitment.
The MYGA laddering strategy
Rather than putting all your money into a single MYGA term, a laddering strategy spreads your investment across multiple MYGAs with staggered maturity dates — one of the smartest ways to use MYGAs.
Example · $300,000 three-rung ladder
| Amount | Term & Rate | Matures |
|---|---|---|
| $100,000 | 3-Year MYGA at ~5.25% | 2027 |
| $100,000 | 5-Year MYGA at ~5.65% | 2029 |
| $100,000 | 7-Year MYGA at ~5.95% | 2031 |
Rate Diversification
Liquidity Every Few Years
Rolling Optimization
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